Union Minister Nitin Gadkari on Tuesday at the 63rd Annual SIAM convention proposed for a 'pollution tax' in the form of additional GST of 10 per cent on diesel vehicles and gensets as a means to cut down on air pollution.
"I am going to handover a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles," Gadkari said. As a warning he also added, "Say goodbye to diesel... Please stop making them, otherwise we will just increase the tax so much that it would become difficult to sell diesel cars."
After his statement was covered by the media the auto shares took a hit and fell down to 36,139.33 right after it hit a new record high of 37,188.36.
Auto shares fall after Nitin Gadkari proposes 10% GST on diesel vehicles | BSE
However, after various media reports started to create a panic, the minister issued a clarification that no such proposal was under active consideration by the government. However he reiterated that there is a need to 'actively embrace cleaner and greener alternative fuels.'
Post the clarification the auto shares seemed to have rebound slightly at 36,442.59 with a drop of 1.67 per cent.
But the shares continued to trade in red, except for Bajaj Auto which was trading at Rs 4,827.80 up by 0.48 per cent.
Auto shares in Red on Tuesday
Maruti shares were down 0.23 per cent at Rs 10,510.20 and HeroMoto Corp shares were at Rs 2,045.40 down by 0.24 per cent. However companies like TVS, Eicher Motors, Tata Motors, Mahindra and Mahindra and Ashokleyland continued to see a drop of above 1 per cent.
TVS Motors shares at 2:10 pm were trading at Rs 1,468.25 down by 1.38 per cent, Eicher Motors saw down 1.62 per cent at Rs 3,349.45 and Mahindra and Mahindra was down 1.71 per cent at 1,555. While Ashokleyland was worse hit with a dip of 2.46 per cent at Rs 180.25, Tata Motors was trading at Rs 623 with a slip of 1.84 per cent.
